New Market Mechanisms & Framework for Various Approaches: Luxury or Necessity?

Transcription

1 New Market Mechanisms & Framework for Various Approaches: Luxury or Necessity? IETA/IEA/EPRI Paris, October 16, 20 Forum Andrei Marcu Head, CEPS Carbon Market Thinking ahead for Europe Centre for European Policy Studies (CEPS) 1

2 The Climate Change World KP1 Orderly/Cartesian All demand/commitments within KP AAU/Art 17 underlying any international transfers Units used KP units Markets delivered more than KP ambition 2

3 KP2 A transition period: KP and Copenhagen/Cancun commitments in parallel CDM/UN mechanisms not a monopoly anymore Other markets/mechanisms emerging Domestically created units could circulate AAUs/Art 17 does not always provide linking Level of ambition vs. market delivery: unknown 3

4 Emissions Trading Developments Worldwide Source IETA

5 Carbon Markets/Mitigation Approaches UNFCCC (under the authority of) CDM JI REDD+ NMM Domestic EU ETS Australia Yasuni BOCM 5

6 UNFCCC negotiations : FVA & NMM Why: Bali Road Map Adaptation to emerging CC framework/sectoral/net reduct. Political text: ambiguous? How do they relate definitions.? Objectives? Functions..? M&P 6

7 FVA & NMM Assumption: A global agreement & UNFCCC directed compliance FVA SCM STM BOCM Australia Yasuni CDM/JI NMM REDD REDD 7

8 Why NMM? Increased level of ambition (maybe) Transition to new climate change regime Net environmental reductions Dissatisfaction with CDM Complexity Achieving too little/too much Difficult to turn the ship 8

9 New Market Mechanisms EU definition Sectoral in nature Sectoral Trading & Sectoral Crediting Under the authority of the COP Top down rules Room for national implementation 9

10 Issues for NMM requirements for Party participation; who can participate; the approaches covered by the NMM; sector coverage; boundaries; methods to determine baselines; the determination of crediting thresholds; the length of the crediting/trading period; the measurement, reporting and verification (MRV) requirements; provisions for tracking of units; the avoidance of double; institutional arrangements, including oversight issues; the allocation of reductions between developed and developing countries; the rules for permanency; share of proceeds; rules for supplementarity and the setting of numerical targets; recognition of early action; treatment of small island developing states (SIDS), least developed countries (LDCs) and vulnerable African countries; the transmission of price signals from the aggregate to the individual level; issues of sustainability; and technology neutrality. 10

11 Why do we need an FVA? Environmental value vs. monetary value of units Environmental/compliance value set by regulator Monetary value set by the market Liquidity Linking 11

12 FVA The FVA is a set of components and rules that will ensure that all approaches used for mitigation will be integrated, and receive recognition for UNFCCC compliance. Through the FVA, units created by a DMM in a jurisdiction will qualify, under certain conditions, to be used for compliance with UNFCCC obligations, by a jurisdiction other than the one under which they were created. The FVA is not concerned with activities that are purely of a domestic nature and do not result in international transfers of units in one way or another. NO UNFCCC compliance FVA become a safety net

13 FVA: Objectives, Scope & Functions Integrate national and international units for UNFCCC compliance Under the authority of the COP Market & non-market approaches/crediting and trading Ensure environmental integrity of units used for UNFCCC compliance. There is no definition of environmental integrity. That accounting can be done - not an FVA objective or function. There is no double-counting 13

14 Functions of FVA Approval Role A Regulatory Body reviews and approves a Market Mechanism created outside the UN and submitted for approval so units can be used for UNFCCC compliance outside the jurisdiction where created Transparency Role Provides for transparency of standards and procedures used in a domestic market mechanism whose units are intended for use with UNFCCC compliance outside the jurisdiction where created 14

15 COP develops standards for Env Integrity Market Regulatory Board Track 1: Approval Track 2: Review & Transparency Developed by Party Domestic DMM Int l DMM DMM unit ITL filter issuance transfer ICU National Registries DMM Domestic Market Mechanism ICU International Compliance Unit Party instructions Party of origin Mechanism Track

16 What is needed from Doha to move forward? Define Objectives Define Functions Define Scope Give mandate to SBSTA to continue work Centre for Europefan Policy Studies (CEPS) Place du Congrès 1, 1000 Brussels, Belgium 16